D.C. moves closer to awarding Medicaid contracts

With tentative contract awards, the city appears to be looking to start its health care program from scratch. (iStockPhoto)

The District appears poised to award some of its largest government contracts, tentatively choosing three firms to manage the health care of about 160,000 low-income city residents.

According to a draft news release obtained by The Washington Post, the city has chosen Medstar Family Choice, Thrive Health Plan and the AmeriHealth Mercy Family of Companies for contracts that can be extended for up to five years. But Health Care Finance Director Wayne Turnage said Tuesday the awards are not final; they are currently under legal review and could still change. Even after the awards are announced, they would be subject to D.C. Council review.

Under the managed-care contracts, the firms are paid a flat monthly fee for each resident they enroll; they then manage and pay claims through a network of doctors, clinics, hospitals and other care providers. The awards could together be worth several billion dollars over the lives of the contracts, with roughly 70 percent of the costs paid in federal Medicaid funds.

The contracts have been under close scrutiny particularly since the political activities of businessman Jeffrey E. Thompson were thrown into question by federal raids a year ago. Thompson’s Chartered Health Plan has been the city’s dominant managed-care contractor for more than a decade. But in recent years, the company has been in failing financial health, and in October city insurance regulators seized control from Thompson.

Two of the new awardees’ names are familiar. AmeriHealth Mercy is the Philadelphia-based firm operating in 14 states that has been in negotiations with the receiver to buy Chartered’s most valuable assets. Winning the new award would pave the way to complete the sale. MedStar Family Choice is a current D.C. contractor and an affiliate of the Maryland-based chain that operates several District hospitals, including the city’s largest — Washington Hospital Center.